Galaxy S4 enables NFC payments

Samsung latest smartphone launch is a harbinger of things to come, according to retail revenue and business assurance expert, Ana Cunha

The launch of the Samsung
Galaxy S4 smartphone marks the first commercially available smartphone on the
market with inbuilt Near Field Communications (NFC) payment technology.

The S4’s Visa payWave technology is designed to enable the Samsung device
to communicate with contactless pay point readers instore in the same way as a contactless
credit or debit card operates and will let S4 users securely connect any Visa
card to their smartphone.

Ana Cunha, retail business
development manager at WeDo Technologies, toldRetail Technology that, whilst this technology is still relatively new and
retailers are only just beginning to adopt it as a payment option, mobile
payments are set to increase with the introduction of additional NFC-enabled
smartphones on the market.

M-commerce efficiency benefits

“As
the technology spreads quickly across the UK over the next couple of years,
time spent at checkouts in retail outlets should reduce, increasing the
retailer’s efficiency,” she predicted.

But, at
the same time, Cunha warned that this technology will bring
a new set of advanced security threats that retailers need to be aware of and
incorporate into their ongoing risk assessment strategy in order to minimise
loss and impact on the bottom line.

“Fraud
threats can result in a series of repercussions such as stock and cash loss, a
drop in the company’s share price, low employee
morale and a damaged brand reputation,”she explained. “Fraud prevention strategies
and tools are evolving and are currently at very different stages around the
world.” According to research
conducted by Martec, 150 of the UK’s
leading retailers revealed that they experienced losses of £3.4 billion due to theft and fraud in 2012, up 10% from
2011.

“As the retail environment evolves, retail companies are
forming new business relationships with third parties, which are raising new
challenges in preventing loss,” she continued. “NFC, more than any other
payment technology being used by retailers, involves a wide variety of
stakeholders, including technology providers, payment providers, content
providers and mobile operators, so monitoring data from all these parties is a
challenge from a retailer’s perspective.”

M-payments increase security risks

Cunha pointed out that the controls that were previously in place
for payment providers are no longer sufficient in this new environment. “This
means that retailers must consider a more advanced system that can monitor
transactions and ensure that NFC is implemented in a secure way,” she advised.

On the
other hand, not all of the aforementioned stakeholders are ready for NFC and,
as a result, retailers are forging ahead and developing their own mobile money
solutions. “Starbucks, for example, launched its own mobile payment on Apple’s
Passbook at the end of last year, which allows customers to pay instore via its
mobile app,” she added. “This type of solution demonstrates that retailers are
keen to adopt solutions in the new transactional landscape as consumers come to
terms with mobile payments.”

As a result, Cunha said it is essential that retailers have measures in place
to monitor transactional data closely so inconsistencies can be spotted quickly
and acted upon before they have a detrimental impact. “A business control
analytics system can monitor data in real-time from multiple systems and
multiple parties to validate transactions and protect profit,” she continued. “Fraud
prevention solutions establish e-payment ‘profiles’ for transactions which are
used to detect ‘suspicious’ transactions and ensures that anomalies are
identified rapidly so that they can be dealt with.”

Keeping pace with expectations

Cunha predicted that these capabilities will become increasingly
important as more NFC enabled smartphones, like the S4, come to market. “Consumers’
expectations are changing as they seek to use mobile as a standard payment
method,” she added. Retailers need to work together with business partners in
order to ensure that NFC, as with any other payment method, is implemented in a
secure and profitable way.

“Profit
protection procedures and systems should protect consumers as much as they
protect the retailers themselves and ensure that they receive the high
standards of payment protection which they rightfully expect,” she concluded.